US dollar stumbles as Trump reverses course on tariffs

Pound (GBP) subdued ahead of BoE rate decision

The pound (GBP) traded sideways during yesterday’s session amid reluctance from GBP investors to make any aggressive bets in advance of the Bank of England’s (BoE) interest rate decision on Thursday.

While the BoE is widely expected to deliver a 25 basis-point rate cut, there are questions over the tone the bank will strike in its forward guidance.

Sterling may remain trapped in a narrow range today as GBP investors continue to brace for the BoE’s impending rate decision.

Euro (EUR) buoyed by easing tariff fears

The euro (EUR) edged higher on Tuesday, supported by hopes that Donald Trump’s threat to impose tariffs on EU goods may be more bluster than substance.

This follows his swift turnaround on his tariffs on Mexico and Canada, which saw them delayed just before they were due to come into effect on Tuesday.

Coming up, the Eurozone will publish its latest producer price index later today. Expect the euro to come under pressure if December’s index points to a softening of producer price pressures.

US dollar (USD) mixed as Trump rethinks tariff stance

The US dollar (USD) wavered through the first half of yesterday’s session as a result of Donald Trump’s shifting stance on tariffs.

USD exchange rates then came under pressure in the afternoon as the latest US job openings and labor turnover survey suggested the US labour market may be cooling.

Looking ahead, the US dollar may remain under pressure today, if the latest ADP employment figures also point to a softening US labour market.

Canadian dollar (CAD) rallies following Trump tariff turnaround

The Canadian dollar (CAD) strengthened through Tuesday’s trading session amid relief that Trump had postponed his tariffs on Canadian goods.

The reprieve could see movement in the ‘loonie’ driven by oil price dynamics today. If prices continue to soften, CAD exchange rates may come under renewed pressure.

Australian dollar (AUD) subdued on underwhelming Chinese data

The Australian dollar (AUD) traded sideways overnight on Tuesday in response to a weaker-than-expected services PMI from China.

New Zealand dollar (NZD) muted amid cautious mood

The New Zealand dollar (NZD) was also mostly rangebound in overnight trade, amid limited market risk appetite.

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